UK and European governments should not have pursued targets to increase the use of biofuels without putting in place "robust" measures to prevent environmental damage, MPs said today.

The Commons environmental audit committee said that, while it recognised that some biofuels are sustainable and could be used to reduce emissions from transport, the absence of robust sustainability standards and mechanisms to prevent damaging land use could lead to environmental damage in the UK and the loss of crucial rainforests around the world.

Biofuels - liquid fuels produced from organic matter rather than from fossil fuels - are a finite and non-renewable resource, currently produced from conventional food and fodder crops.

Supporters argue that biofuels can reduce greenhouse gas emissions, because the plants they are made from absorb carbon dioxide from the air. But a number of studies have raised doubts about the green credentials of many of the leading candidates, such as palm oil and ethanol made from corn. Critics say biofuels compete for land with staple food crops and vast areas of rainforest are cleared to grow them.

In its report, Are biofuels sustainable?, the committee urged the government to ensure that its biofuels policy balanced greenhouse gas emission cuts with wider environmental impacts, "so that biofuels are only used where they contribute to sustainable emissions reductions".

"Without this reassessment, biofuels could lead to a range of environmental impacts including water pollution and biodiversity loss. In addition, the absence of international mechanisms to protect rainforests means that biofuels will add further to the already significant pressures to cut them down to make way for palm oil plantations," the report reads.

"On the basis of current biofuel technology, more greenhouse gas cuts could be achieved at lower cost and risk by implementing a range of other policies."

It said there could be significant opportunities for cost-effectively cutting greenhouse gas emissions by planting forests and restoring habitats instead.

The report found that biofuels are generally an expensive and ineffective way to cut greenhouse gas emissions when compared to other policies. Emissions from road transport can be cut cost-effectively, and with lower environmental risk, by implementing a range of other policies, the MPs said.

Europe has pledged that biofuels, such as bioethanol and biodiesel, will make up 10% of transport fuel by 2020. Britain has a separate target of 5% biofuels in petrol and diesel by 2010 through its Renewable Transport Fuel Obligation (RTFO), which is due to come into force in April.

The committee called for a moratorium on biofuel targets. It said the government should concentrate on the use of sustainable biofuels such as waste vegetable oil and the development of more efficient biofuel technologies that "could have a role to play in the future once they have been shown to be more sustainable".

The committee's chairman, Tim Yeo, said: "Biofuels can reduce greenhouse gas emissions from road transport – but at present most biofuels have a detrimental impact on the environment overall.

"Advanced second generation biofuels may have an important role in the future, but these technologies are some years away. The government should support their development by creating a stable investment climate out to 2020."

The committee also concluded that biofuels are unlikely to improve fuel security as they largely rely on fossil fuels for their production. It said that current agricultural support for biofuels is largely unsustainable, and that a large biofuel industry based on current technology was likely to increase food prices and could damage food security in developing countries.

"Today's report is the latest warning about the damage that a rapid growth in biofuels could have on people and the environment. The Government and EU should abandon their plans for increasing the use of this damaging fuel, and concentrate instead on measures that will cut energy use and lead to the speedy development of safe, clean and sustainable renewables."

Last week, the EU announced that its drive to run vehicles on biofuels instead of petrol and diesel to reduce greenhouse gas emissions was to be reviewed after concerns about its environmental impact.

On the same day, the Royal Society warned that biofuels have a limited ability to replace fossil fuels and should not be regarded as a 'silver bullet' solution to reducing transport emissions.

This followed a scientific report in early January which warned that using biofuels made from corn, sugar cane and soy could have a greater environmental impact than burning fossil fuels. Although the fuels themselves emitted fewer greenhouse gases, they had higher costs in terms of biodiversity loss and destruction of farmland, according to a report published in the journal Science.